Aussie battle with tech Goliaths could slingshot in favor of tiny Israel’s media

Despite Israel’s small media market and relative lack of clout, it could benefit from moves by larger nations to force Facebook and other social media giants to pay for content, local experts say, predicting that it could “piggyback” on legislation likely to come out of Europe.

On Tuesday, Facebook climbed down from its ban on news content for Australian users after reaching a deal with Canberra on amendments to proposed legislation that would make the social network and Google pay for Australian news that they feature.

The deal marked a major victory in Australian efforts to make Facebook and Google, the two major gateways to the internet, pay for the third-party journalistic content they provide users and set a precedent being closely watched by media outlets and governments around the world eager to protect local content creators.

However, analysts say that the win has only chinked the armor of the tech giants, and “huge” battles lay ahead between internet titans and governments on subjects ranging from privacy and taxation regulations to freedom of speech, curbing fake news and protecting elections.

Facebook blocked Australian users from accessing and sharing news last week after the local House of Representatives passed a draft law that would have forced it to pay for journalistic content created by third parties that is shared on its platform.

On Tuesday, the social media giant backed down and reinstated the news access, following global public outrage that the news blockade also cut off access, at least temporarily, to government pandemic, public health, and emergency services.

The fight boils down to getting Facebook, Google and other social media networks to pay for content that is generated by traditional media outlets around the world, as more and more advertising dollars are going to the social networks on which this content is shared by users. Google and Facebook together receive 60 percent of US digital ad spending and 25 percent of all ad spending globally.

“Facebook has tried to do this very aggressive move but kind of surrendered after a couple of days, because of vast political and public criticism around the world,” said Tehilla Shwartz Altshuler, a senior fellow at the Israel Democracy Institute, in a phone interview. “What happened in Australia is going to open up the gate for other countries to create compensation policy plans to traditional media.”

“There are going to be more fights of this kind going forward,” Shwartz Altshuler said. “We are talking about regulation all around the Western world, privacy regulation, monopoly regulation, taxation of digital platforms, fake news regulation, elections regulation. We are heading toward a huge, huge battleground and the social media platforms are not going to surrender easily.”

The Australian government’s battle against the tech Goliaths come as the latter face increased global scrutiny of their operations.

“We must look at the Australian story in a wider context – an international context that will see a lot of regulation and a lot of preoccupation with everything that is happening with these digital platforms,” said Aviv Gaon, a lecturer on IP, tech and competition at the Radzyner Law School at IDC Herzliya.

The turning point for this thrust was the Cambridge Analytica data scandal, in which the British consulting firm obtained the personal data of millions of Facebook users without their consent and used it for political advertising. “Since the breaking of that story [in 2018], people suddenly understood that here we have a digital platform with a lot of power,” Gaon said, leading to the increased pressure from governments around the world to step up curbs and regulations.

The Australian government initiative has got people talking about the “sale of articles and revenue,” Gaon said. But it is clear that along with that conversation, there will be “scrutiny about how these platforms dominate our conversation and how much they influence us.”

“I have no doubt that the precedent in Australia will give other countries a push and the confidence to try and impose regulation on other issues too,” he said, including freedom of speech and privacy.

On Wednesday, Nick Clegg, Facebook’s VP of Global Affairs, wrote in a blog post that the social media network looks “forward to agreeing to new deals with publishers and enabling Australians to share news links once again.”

The agreement with the Australian government has brought changes to the proposed law “that mean fair negotiations” with media outlets “are encouraged without the looming threat of heavy-handed and unpredictable arbitration,” CLegg wrote.

“At the heart of it, in Facebook’s view, is a fundamental misunderstanding of the relationship between Facebook and news publishers. Facebook is more than willing to partner with news publishers. We absolutely recognize quality journalism is at the heart of how open societies function — informing and empowering citizens and holding the powerful to account. That’s why we’ve invested $600 million since 2018 to support the news industry, and plan at least $1 billion more over the next three years.”

Last month, Facebook announced deals with The Guardian, Telegraph Media Group, Financial Times, Daily Mail Group, Sky News and many more, including local, regional and lifestyle publishers, to pay for content in its Facebook News product in the UK, he wrote. Similar deals have been reached with publishers in the US, and Facebook is in active negotiations with others in Germany and France, Clegg wrote.

“There are legitimate concerns to be addressed about the size and power of tech companies, just as there are serious issues about the disruption the internet has caused to the news industry. These need to be solved in a way that holds tech companies accountable and keeps journalism sustainable. But a new settlement needs to be based on the facts of how value is derived from news online, not an upside-down portrayal of how news and information flows on the internet.”

The coronavirus pandemic, which forced more interactions online, has exacerbated the problem for traditional media outlets as advertising budgets have declined globally, said Lior Zalmanson, senior lecturer at the Coller School of Management at Tel Aviv University. “2020 has been a big catalyst [for pushing] the question of content rights, because life has moved online, and an online presence has become more important than an offline presence.”

“As this trend grows, there will be more demand from Facebook and Google in taking back money made with the creativity, content and identity” of others.

The two tech giants are a growing force in Israeli advertising as well. According to the Israeli Marketing Association, an association of Israeli retailers, insurance companies and other firms with large advertising budgets, about $1.3 billion total is spent on advertising by Israeli entities each year. Thirty-eight percent of that goes to digital advertising. Most of that digital advertising money goes to Google and Facebook.

In 2019, according to the Marketing Association, the amount Israeli entities spent on digital advertising for the first time surpassed the amount spent on television. The share spent on print news media was at 11 percent and falling rapidly.

Pressure has grown in Israel as well to get Facebook and Google to pay for content, though Israel’s clout is small compared to that of other markets, the Israeli experts said.

On November 5, a newly created pressure group consisting of prominent Israeli broadcasters, radio stations and print news outlets sent a strongly worded position paper to the Committee for the Examination of Regulation of Broadcasting, a special panel convened by the Communications Ministry to examine how broadcasters are regulated in light of changes in media consumption in recent years.

The new lobby, which calls itself the Forum of Content Creators, urged the committee to address the crisis of television, radio and print media against the backdrop of Google and Facebook’s growing dominance in the advertising market.

According to the Forum of Content Creators, not only have Google and Facebook gobbled up ad market share, but they use local producers’ content without paying for it.

Zalmanson noted that the significant presence of News Corp media mogul Rupert Murdoch gave the Australian media ecosystem the necessary levers to be able to lean on Canberra to pass legislation pressuring the tech firms.

The media in Israel is not as powerful, he said, meaning it doesn’t have the necessary clout with the government to lobby effectively for similar legislation. And its advertising market is too small to be able to put any pressure on Facebook or others directly.

“For Israel, the best to hope for is to piggyback” on the breakthroughs made by other countries, he said.

“Israel has some advantage, as it is close to Silicon Valley,” and both Facebook and Google have offices in Israel, he said. “There is special attention to the Israel case, but when it comes to marketing, we are a small player,” he added.

Gaon also thinks that Israel’s best bet is to see what happens in other countries first, and follow suit. “Once we see [what happens in] other countries and it becomes some kind of consensus, it is clear that the Israeli market will be affected by this as well.”

Even so, Shwartz Altshuler says much depends on the determination of local governments to sign up for battle. With Israel swamped by the coronavirus pandemic and its fourth election in two years, the chances of it taking on the tech giants in the short term are slim. And a win in March by the right wing, which often accuses the press of skewing left, may not be conducive to moves to support the industry.

“To set up compensation policy plans for traditional media, as in Australia, the government needs to have an incentive to do so, to want to help its media landscape, and I don’t see this happening in the near future in Israel because of the tension between politicians and the media,” she said.

Shwartz Altshuler added that the whole issue of social media networks compensating media outlets for their content must also be assessed under a different light — that of these giants gaining undue influence on the local media.

“Do we want social media to subsidize traditional media? Some people could call it hush money, because social media platforms are giving out a little bit of their unbelievably huge income so that traditional media won’t criticize them,” she said. “There is a bigger issue to look at here: is the compensation of traditional media the most pressing issue at the moment, or should we see how to create new forms of media, innovation initiatives, smaller media outlets, not for profit media outlets,” that better suit the changing times.

In an emailed statement, Google said: “We have paid for news content for many years, making Google one of the biggest funders of journalism in the world. Through the partnerships we have with publishers (for example ad revenue share; products like Subscribe with Google); through our funding of innovation projects around the world via the Google News Initiative and of course, the free traffic publishers receive from Google’s products when people click on links (24 billion visits a month to publishers around the world). Showcase is our latest investment and we plan to roll this out more widely over time.”

AP contributed to this report.